Financial Performance - Revenues for Q3 2020 increased by $141.8 million, or 10%, compared to Q3 2019, with HVAC equipment sales (70% of total sales) rising by 12%[93] - On a same-store basis, revenues increased by $104.8 million, or 8%, driven by a 10% increase in HVAC equipment sales, including a 17% increase in residential HVAC equipment[93] - Net income attributable to Watsco, Inc. for Q3 2020 was 6.9%, up from 6.0% in Q3 2019, reflecting improved profitability[88] - Gross profit for Q3 2020 increased by $39.1 million, or 12%, with a gross profit margin of 24.3% compared to 24.0% in Q3 2019[94] - Net income attributable to Watsco for Q3 2020 increased by $23.0 million, or 28%, driven by higher revenues and gross profit[100] - Revenues for the nine months ended September 30, 2020 increased by $202.2 million, or 5%, with HVAC equipment sales accounting for 70% of total sales[101] - Gross profit for the nine months ended September 30, 2020 increased by $44.1 million, or 5%, with a gross profit margin of 24.1%, down from 24.2% in the same period of 2019[102] Operational Changes - The impact of the COVID-19 pandemic has led to operational modifications, including contactless sales and servicing capabilities, to safeguard employees and customers[77] - The company has implemented cost-reduction measures, including compensation reductions and rent abatements, to preserve liquidity during the pandemic[78] Cash and Liquidity - The company reported $92.6 million in cash and $1.8 billion in shareholders' equity as of September 30, 2020, with only $0.7 million drawn from a $560.0 million credit facility[79] - Cash flows provided by operating activities for the nine months ended September 30, 2020 were $372.8 million, an increase of $175.3 million compared to 2019[114] - Working capital decreased to $1,034.6 million as of September 30, 2020, down from $1,085.0 million at December 31, 2019[113] - The company maintained $92.6 million in cash and cash equivalents as of September 30, 2020, with $64.7 million held by foreign subsidiaries[110] Shareholder Returns - Future dividends remain at $1.775 per share, with changes dependent on cash flow, profitability, and financial condition[79] - The company paid cash dividends of $5.15 and $4.80 per share of Common stock and Class B common stock for the nine months ended September 30, 2020, and 2019, respectively[127] - A regular quarterly cash dividend of $1.775 per share was declared on October 1, 2020, to be paid on October 30, 2020[127] - The company has repurchased a total of 6,370,913 shares of Common and Class B common stock at a cost of $114.4 million since the inception of the share repurchase program[128] - As of September 30, 2020, there were 1,129,087 shares remaining authorized for repurchase under the program[128] Strategic Growth - The company continually evaluates potential acquisitions and joint ventures, indicating a proactive approach to growth opportunities[126] - The financial position and earnings history of the company provide a basis for obtaining additional debt financing at competitive rates if suitable acquisition opportunities arise[126] Risk Management - There have been no material changes to the information regarding market risk as disclosed in the Annual Report for the year ended December 31, 2019[129] Cost Management - Selling, general and administrative expenses for Q3 2020 rose by $8.1 million, or 4%, but as a percentage of revenues decreased to 14.4% from 15.3% in Q3 2019[95] - The gross profit margin for Q3 2020 was 24.3%, an increase from 24.0% in Q3 2019, while selling, general and administrative expenses decreased to 14.4% from 15.3%[88]
Watsco(WSO_B) - 2020 Q3 - Quarterly Report